Salary comparisons difficult to make for CareFirst's chief

Jamie Smith HopkinsSun Staff

CareFirst BlueCross BlueShield is a nonprofit - except that it pays taxes unlike a charity, competes with for-profit insurers, tried to convert to a for-profit itself and is currently promoting its charitable efforts to stave off critics.

Got that?

If you're trying to decide whether the Owings Mills health insurer's chief executive is overpaid, as critics have claimed, you first have to decide with whom to compare him. That's not very clear-cut.

CEO William L. Jews' salary and incentives totaled $3 million in 2003, the most recent numbers available - not including about $370,000 in deferred compensation.

That's far above what any local charities pay, but then CareFirst is not a charity. That's exactly the same as the cash compensation paid by for-profit competitor Coventry Health Care Inc. of Bethesda to its then-chief executive in 2003 - though Allen F. Wise ended up with more than $15.5 million once stock awards and similar extras were added in.

On the other hand, the median compensation paid by similar nonprofit BlueCross BlueShield plans in 2002 - the most recent data from CareFirst's compensation consultant - is nearly $500,000 less than Jews earned that year.

That's partly because CareFirst compared its compensation with that of for-profit insurers as well as nonprofits, a practice that state legislators forbade with a 2003 law.

CareFirst said most of its top executives have been in their jobs for more than a decade, which also increases salaries.

"The board has always relied on outside, independent compensation consultants to advise it," said Jeffery W. Valentine, a CareFirst spokesman. "We compete against national insurers for business, so we also need to compete with those national insurers in recruiting and retaining experienced and talented executives."

Most of Jews' compensation comes in the form of incentives earned for meeting performance targets for membership growth, financial performance and other measures. The company has 3.3 million members.